Dicerna Pharmaceuticals has found some deep pockets to support its approach to creating RNA interference drugs. The Watertown, MA-based company is announcing today that it has formed an alliance with Japan-based Kyowa Hakko Kirin.

Under the deal, Kyowa Hakko Kirin will get access to Dicerna’s proprietary RNAi drug technology against one undisclosed target on cancer cells. In exchange, Dicerna will get $4 million in upfront cash, plus $120 million in milestone payments for success in development and commercialization, as well as royalties on future product sales. The partnership can be broadened over time to include as many as 10 more drug targets for cancer and other diseases, each with the same financial terms. Dicerna also has an option to co-promote and equally split the profits in the U.S. on the initial cancer drug.

This is the first significant partnership for Dicerna, a company founded in 2007 on the idea that it had found a “second doorway” of RNA interference. Like Cambridge, MA-based Alnylam Pharmaceuticals and others, Dicerna is seeking to specifically silence disease-related genes. One key difference is that Dicerna’s drugs are a little longer than so-called small interfering RNA molecules, and they interact with an enzyme called dicer that’s involved at an earlier step in the RNAi process. Kyowa Hakko Kirin has a long history of manufacturing and marketing biotech drugs in Japan, and it has its own internal teams devoted to RNAi research and development.

“They looked carefully at different siRNA opportunities for some time, and they chose this one,” says Dicerna CEO Jim Jenson. “They are committed to biotech, and they are a strong player in Japan.”

Dicerna still has a lot to prove about its method, as none of its treatments are yet in clinical trials. The partnership does provide cash that will enable Dicerna to add a few new faces to its staff of 23 employees, Jenson says. It also helps provide outside validation that should enable the company to raise a Series B venture round in 2010, which he expects will be worth … Next Page »